Singapore Saving Bonds (SSB)
Asked on 23 May 2020
The SSB is capital guaranteed by the government and you will always be able to get your capital back without any loss. There are no price fluctuations. Applying and/or redeeming will require a nominal $2 fee.
The ABF Singapore bond ETF is an ETF that tracks mutliple bonds including Singapore Government Bonds, and thus will have price fluctuations due to market movements. You might incur losses if you sell at a low. Also, you'll need to pay brokerage to buy and sell.
The SSB is thus more stable and not volatile at all. The ETF would be riskier if you want to look at it that way.
Singapore Savings Bond is govt backed and has principal protection. It is issued every month by the SG government and is like a fixed deposit. ABF Singapore Bond is an ETF and traded on the stock market and consist of a basket of investment grade bonds. Both are bonds however ABF will be slightly riskier due to it's ETF nature (buying and selling on the stock market)
It's true that ABF Singapore bond fund tracks multiple bonds including Singapore government bonds, and especially so. It has ~90% Singapore government holdings, which means it is very similar to SSB.
Image below is ABF Singapore bond fund's holdings
Perhaps there are different class of Singapore bonds hence the different return, but maybe because ABF Singapore bond fund bought these longer tenure bonds which is giving out higher returns as compared to current bonds due to the global deflation interest rates.
From how I see it, SSB you are buying 100% current Singapore bonds, and ABF Singapore bond fund you are buying 90% existing Singapore bonds.
Please let me know if I am getting this right, as it's also my first time looking at the both of them. Thanks!
Update: Did some further digging and, based on this 2017 article ABF was holding ~90% of Singapore government, or quasi government bonds in 2017 as well. Which means that is is consistently holding high grade bonds belonging to SG gov.
Personally I'll go for SSB directly if I'm getting bonds. If you want to go for higher returns then ETFs in stocks is better than ETFs in Bonds
Singapore Savings Bonds are offered by the Singapore Government monthly. Each month’s issue has different interest rates. Coupons are paid by the Singapore Government. However the recent rates have been very low. Transaction cost is $2/transaction (buy/redeem). Can be be applied for through ibanking/ATMs of the local banks.
ABF Singapore Bond ETF is listed on the SGX and offered by Nikko AM. It invests in bonds from the Singapore Government and other related entities. As it is purchased through a stock brokerage, the usual transaction fees apply. But returns are better than SSBs.
Risk are more or less similar in terms of default since it’s the Singapore Government. Price movement of the ETF is another factor to be mindful of.
Show More Products